Kampala — The African Renewable Energy Fund (AREF), has $100 million of committed capital to support small to medium scale independent power producers (IPPs).
According to a statement sent to East African Business Week, the fund, which will be based in Nairobi, wants to raise $200 million within the next 12 months.
The money is for grid-connected development stage renewable energy projects, including small hydro, wind, geothermal, solar, biomass and waste gas.
Initially, the fund will be promoted in a joint initiative by the African Biofuel and Renewable Energy Company (ABREC), the African Development Bank (AfDB), AREF and will be managed by Berkeley Energy Africa Limited (Berkeley Energy).
Gabriel Negatu, the AfDB Regional Director for the Eastern Africa Resource Center said, "As Africa's largest infrastructure finance partner, we understand the value of supporting both large-scale and small-scale projects as part of our strategy for Africa to promote inclusive and sustainable growth."
Berkeley is a fund manager focused on developing and investing in renewable energy projects in emerging markets. Inadequate electricity supplies ranks high as a hurdle to African economic growth.
The fund will target IPPs with an ideal size of between 5MW-50MW and a commitment per project of between $10 million to $30 million with the capacity to source further funding from co-investors where necessary for larger investments.
'Over the past decade, the AfDB has established itself as a prime catalyst for renewable energy investment on the continent and is currently hosting the Africa Hub for the Sustainable Energy for All initiative.
AfDB is the fund's lead sponsor, bringing in $65 million in an equity investment package from its statutory resources. Money was also pooled from climate finance instruments such as Sustainable Energy for Africa (SEFA) and the Global Environment Facility (GEF) to leverage commercial and institutional investment.
Investors include the West African Development Bank, Ecowas Bank for Investment and Development (EBID), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), Calvert Foundation and ABREC, who are the vision bearers of the fund.